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ashly138 ashly138
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6 years ago
Arfaei Company manufactures chairs. Because the efforts of manufacturing are approximately equal between labour and machinery, management is considering other possible cost drivers. By considering different cost drivers, it is anticipated that the estimating process can be improved. The following cost estimating equations with their r2 values have been determined for 2016:

1.   X = cutting time   y = $19,500 + $20X   r2 = 0.65
2.   X = labour   y = $5,000 + $25X   r2 = 0.49
3.   X = machinery   y = $44,500 + $5X   r2 = 0.55

Required:
a.   Which equation should be selected for the analysis?
b.   What other factors should be included in the selection of the estimating equation?
Textbook 
Cost Accounting: A Managerial Emphasis, Canadian Edition

Cost Accounting: A Managerial Emphasis, Canadian Edition


Edition: 7th
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AllopaAllopa
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ashly138 Author
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6 years ago
Thanks for your help!!
riptide
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Yesterday
Thanks
homework1
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2 hours ago
this is exactly what I needed
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